Page 11 - AfrOil Week 03 2023

AfrOil POLICY AfrOil

This training will enable them to run the facili- three years to make the same move. Six years
ties efficiently to sustain the gains made over the after the exit of the expatriate, we have built solid
years, he said. intellectual capital and done three successful
“It took Trinidad 40 years to become fully maintenance shutdowns,” he explained further,
indigenous, Nigeria 50 years and Ghana just according to a report from the Daily Graphic. ™

Eskom, National Treasury row over diesel

funds amidst worsening energy crisis

SOUTH AFRICA SOUTH Africa’s embattled national power existing fundraising plan which it is executing
utility Eskom is trying to resolve a behind-the- including private placement rolls, but this still
scenes dispute with the National Treasury over brings them, including NT bailouts, to low sin-
much-needed diesel funds amid a worsening gle-digit cash levels at the end of the year,” Mon-
domestic energy crisis, News24 reported on talto was quoted as saying by News24.
January 17. “As such, there is absolutely no liquidity or
Power cuts, known locally as load-shedding, ‘extra’ or ‘new’ funding to pay for diesel. I think
have escalated since January 10, when Eskom many people don’t quite realise how low year-
implemented its worst-ever rolling outages end cash levels are going to be, and this is indeed
(Stage 6) for 8-12 hours a day for households why more bailouts may be needed in the next
and businesses until further notice. The only fiscal year,” he added.
immediate way to reduce load-shedding is for Credit analyst at Nedbank Corporate and
Eskom to burn diesel to power its open-cycle gas Investment Banking (CIB) Jones Gondo said
turbines (OCGT), writes News24. All other pos- it was unrealistic to think that Eskom would
sible solutions would take at least 18-24 months. physically have cash available due to the rollo-
During meetings with political parties, ver because the entity has so many competing
organised labour representatives and busi- needs, especially considering the severity of its
nesses, chaired by President Cyril Ramaphosa negative cash flow position.
on January 16, the key message from the Eskom In an update on the power system for the
board was that load-shedding is here to stay for next 24 hours, Eskom announced that it had
the next two years. been able to procure an additional 50mn litres
A steady supply of diesel would reduce of diesel, which “will be utilised sparingly to
load-shedding by two stages. But Eskom said in manage the pumped storage dam levels and to
December that it had run out of money to buy limit the amount of load shedding during the
diesel and had already overspent its budget. day,” says News24.
In the meantime, News24 has learned of Burning diesel to power OCGTs comes at an
a recent decision by Public Investment Corp. enormous cost, with 50mn litres costing around
(PIC) to roll over ZAR13bn ($758mn) of Eskom ZAR1bn. However, economists agree that it is
debt when it becomes due on January 25, as con- always less than the cost of unserved energy to
firmed by the PIC on January 16. the economy. If Eskom spreads the 50mn litres
The PIC decision has led to the Treasury’s over time and runs the turbines six hours a day,
expectation that Eskom will now have available it will last for 13 days.
cash to buy diesel with the money allocated by Gondo said that it appeared that Treasury
the Treasury for debt servicing. But Eskom said was attempting to impose some discipline on
that it did not have spare cash and that the PIC Eskom by playing hardball with funding for die-
rollover had already been figured into its plans. sel. This was unrealistic, he said, given the state
“The rollover is in the process of being exe- of Eskom. “The consequence for the economy of
cuted,” Eskom said in response to questions on not providing funding for diesel is more damag-
January 16. “However, both the equity from ing than the cost of paying for it,” he said.
Treasury and the rollover of Eskom’s redeem- On January 17, the National Energy Crisis
able debt with the PIC form part of Eskom’s Committee (NECCOM) began a three-day
annual borrowing programme for the financial meeting to deal with the load shedding crisis.
year ending 31 March 2023. Accordingly, nei- Among the top priorities is solving the diesel
ther source represents additional liquidity with problem. Other measures that will be on the
which to purchase diesel.” agenda will include a feed-in-tariff for domestic
According to Peter Attard Montalto, a lead users to sell power back to the grid and the pos-
analyst on capital markets at Intellidex, Eskom’s sibility of “demand-side measures,” which would
funding plan would leave it with almost no entail a price structure that penalises users for
cash at the end of March 2023. “Eskom has an exceeding certain limits on consumption. ™

Week 03 19•January•2023 www. NEWSBASE .com P11